There is no economy left to recover. -The US manufacturing
economy was lost to offshoring and free trade ideology. -It was
replaced by a mythical "New Economy."The
"New Economy" was based on services. -Its artificial life was fed by
the Federal Reserve's artificially low interest rates, which produced a
real estate bubble, and by "free market" financial deregulation, which
unleashed financial gangsters to new heights of debt leverage and
fraudulent financial products.The
real economy was traded away for a make-believe economy. When the
make-believe economy collapsed, Americans' wealth in their real estate,
pensions, and savings collapsed dramatically while their jobs
disappeared.The debt economy caused
Americans to leverage their assets. -They refinanced their homes and
spent the equity. -They maxed out numerous credit cards. -They worked
as many jobs as they could find. -Debt expansion and multiple family
incomes kept the economy going.And
now suddenly Americans can't borrow in order to spend. -They are over
their heads in debt. Jobs are disappearing. -America's consumer
economy, approximately 70% of GDP, is dead. -Those Americans who still
have jobs are saving against the prospect of job loss. -Millions are
homeless. -Some have moved in with family and friends; others are
living in tent cities.Meanwhile the US government's budget deficit has jumped from $455 billion in 2008 to$2,000
billion this year, with another $2,000 billion on the books for 2010.
-And President Obama has intensified America's expensive war of
aggression in Afghanistan and initiated a new war in Pakistan.There
is no way for these deficits to be financed except by printing money or
by further collapse in stock markets that would drive people out of
equity into bonds.The US government's
budget is 50% in the red. -That means half of every dollar the federal
government spends must be borrowed or printed. -Because of the worldwidedebacle
caused by Wall Street's financial gangsterism, the world needs its own
money and hasn't $2 trillion annually to lend to Washington.As
dollars are printed, the growing supply adds to the pressure on the
dollar's role as reserve currency. -Already America's largest creditor,
China, is admonishing Washington to protect China's investment in US
debt and lobbying for a new reserve currency to replace the dollar
before it collapses. According to various reports, China is spending
down its holdings of US dollars by acquiring gold and stocks of raw
materials and energy.The price of one
ounce gold coins is $1,000 despite efforts of the US government to hold
down the gold price. -How high will this price jump when the rest of
the world decides that the bankruptcy of "the world's only superpower"
is at hand?And what will happen to
America's ability to import not only oil, but also the manufactured
goods on which it is import-dependent?When
the over-supplied US dollar loses the reserve currency role, the US
will no longer be able to pay for its massive imports of real goods and
services with pieces of paper. -Overnight, shortages will appear and
Americans will be poorer.Nothing in Presidents Bush and Obama's economic policy addresses the real issues.- Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a "bloody fortune" with US aid.It
was not the millions of now homeless homeowners who were bailed out.
-It was not the scant remains of American manufacturing--General Motors
and Chrysler--that were bailed out. -It was the Wall Street Banks.According to Bloomberg.com,
Goldman Sachs' current record earnings from their free or low cost
capital supplied by broke American taxpayers has led the firm to decide
to boost compensation and benefits by 33 percent. On an annual basis,
this comes to compensation of $773,000 per employee.This should tell even the most dimwitted patriot who "their" government represents.The
worst of the economic crisis has not yet hit. -I don't mean the rest of
the real estate crisis that is waiting in the wings. -Home prices will
fall further when the foreclosed properties currently held off the
market are dumped. -Store and office closings are adversely impacting
the ability of owners of shopping malls and office buildings to make
their mortgage payments. Commercial real estate loans were also
securitized and turned into derivatives.The
real crisis awaits us. -It is the crisis of high unemployment, of
stagnant and declining real wages confronted with rising prices from
the printing of money to pay the government's bills and from the
dollar's loss of exchange value. -Suddenly, Wal-Mart prices will look
like Nieman Marcus prices.Retirees
dependent on state pension systems, which cannot print money, might not
be paid, or might be paid with IOUs. -They will not even have
depreciating money with which to try to pay their bills. -Desperate tax
authorities will squeeze the remaining life out of the middle class.Nothing
in Obama's economic policy is directed at saving the US dollar as
reserve currency or the livelihoods of the American people. -Obama's
policy, like Bush's before him, is keyed to the enrichment of Goldman
Sachs and the armament industries.Matt
Taibbi describes Goldman Sachs as "a great vampire squid wrapped around
the face of humanity, relentless jamming its blood funnel into anything
that smells like money." -Look at the Goldman Sachs representatives in
the Clinton, Bush and Obama administrations. -This bankster firm
controls the economic policy of the United States.Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)